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The Political Failure of an Economic Theory: Physiocracy

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AbstractPhysiocracy, the “rule of nature”, which held agriculture to be the sole source of wealth, was the first theoretical account of the relationship between the economy and population. The centrality of agriculture is the key to understanding the theory of population. Population is a dependent variable, and from this a number of implications flow concerning luxury, free trade, the fiscal system, and the army.The “Physiocratic movement” failed, however, to win acceptance for its system and this political failure was inextricably linked to the theoretical construct. The Physiocrats’ strategy for development lacked credibility compared with the alternatives, in particular colonial trade. Also damaging was the association of their views with the fear of famine. Finally, they were unable to resolve the impossible contradictions between rigour in economic theory and the pressure of political realities. The result was their near total isolation.